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January 29, 2003
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Jaguar will suspend production of its X-type model for the last two weeks in February, trimming output by about 2,500 cars, according to The Guardian, a British newspaper.

"For the future, we don't want to build up dangerous levels of stocks," said Jaguar spokesman Colin Cook, confirming the Guardian report. "It's an uncertain environment."
Cook denied that weak X-type sales caused the production cutback, saying that the car drove Jaguar's record vehicle sales in 2002 and adding that production of Jaguar's other models — including the new flagship XJ that goes on sale this spring — is continuing as scheduled.



Jaguar weighs plant needs, considers closing one of its factories

By BRADFORD WERNLE | Automotive News Europe

Jaguar will consider closing one of its three factories - and the most logical candidate is Browns Lane, England, the company's oldest plant and traditional home.

Jaguar produced about 130,000 cars in its three plants last year. That number is fewer than rivals BMW and Mercedes-Benz produce in any one of their largest German plants. Saab, comparably sized to Jaguar, produces virtually all its two models in one Swedish plant, Trollhattan.

"We can't use three plants to build 20 percent of what BMW makes in three plants," said a Jaguar source, who said the capacity issue will be debated - probably this year.

In Detroit last week, Ford President Nick Scheele predicted Jaguar will be profitable in 2003 after losing nearly $500 million [e480 million] in 2002. Jaguar doesn't plan to be as big as its German rivals, but if the company is to earn the kind of margins they make and if it is to kick in its expected share of Premier Automotive Group's contribution to Ford Motor Co. profits, Jaguar must trim costs.

Jaguar had a difficult time in 2002 as sales of the X-type faltered and the start of production of the new XJ was delayed. Further challenges lie ahead. The English luxury brand is merging its operations with Land Rover, another of Ford's Premier brands. The move will have benefits in the long term, but could be a short-term distraction. With its new XJ, Jaguar has bet that a new and still unproven aluminum body shop operation will turn it into an industry leader. And Jaguar has seen lots of management turnover.

"We've been going through some growing pains," said Jaguar spokeswoman Kay Frances. "Obviously that's something we view as temporary. We have a good strong strategy for the future. Part of that includes getting best value out of resources we've got and reviewing our operations periodically. We're working very hard to achieve that out of all three plants we have."

Closing a plant could be a sensible move, said David Cole, director of the Center for Automotive Research in Ann Arbor, Michigan, USA.

"There's a new manufacturing paradigm that's emerging is one step beyond lean -- to build different products on the same line, to be able to mix," he said. "[Using flexible systems] they could conceivably even consolidate to one facility. That's one way you can take an awful lot of costs out in a hurry."

Jaguar's current overcapacity is a direct result of politics and its own ambitious growth plans. Around the beginning of 1998, Ford, led by Jac Nasser, made the decision to convert Ford's Escort plant in Halewood, England, into a Jaguar factory to make what was then called the "baby Jaguar," now the X-type.

The decision saved Nasser from having to close Halewood. But, coupled with the beginning of production of the S-type at Castle Bromwich, Jaguar had suddenly gone from one to three factories.

Browns Lane assembles Jaguar's traditional flagship cars, the XJ and XK. But it has no stamping or body shop. Halewood does pressings for the S- and X-type, and the body shops for the XJ, XK and S-type are all at Castle Bromwich.

The aluminum bodies for the new XJ are stamped and riveted at Castle Bromwich and trucked to Browns Lane. Jaguar's plans to use aluminum in more future models could complicate the issue of consolidating manufacturing operations. It is better not to mix aluminum and steel, particularly in a body shop, said Richard Schultz, aluminum operations manager for Ducker Research, a Detroit industrial market research firm.

Jaguar has excess capacity. Halewood was geared for about 150,000 Escorts a year when it was a Ford plant. Making the more complex Jaguars takes longer, so capacity is estimated at about 120,000, said Nigel Griffiths, analyst for DRI Automotive in London.

In 2002, X-type production slowed to about 69,000 units.

Castle Bromwich peaked at 53,521 S-types in 2000 and has capacity of about 80,000, Griffiths said. Browns Lane has capacity of about 50,000, he added.

Many Jaguar operations are being merged with those of Land Rover, but manufacturing is likely to remain separate. Land Rover produces all four of its models at Solihull, England.

Closing a plant is difficult, and political and labor considerations weigh heavily. Scheele and David Thursfield, Ford's head of international operations, know this well. They orchestrated the closing of Ford's Dagenham car assembly plant in 2001. The plant is now a diesel engine center.

Both Scheele and Thursfield are British and Ford career lifers, but they are not sentimental. They know how urgently Ford and its various brands need to cut costs to remain competitive.

"We're in a very fluid period for this industry," said Cole. "They have to figure out how to make money with what they're doing."

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